Sunday, 4 August 2013

An Open Letter to Ed Milliband

Dear Mr Milliband

Old Labour, New Labour, One Nation Labour…What does it all mean exactly?

I am old enough to remember when the political parties put forward their principles, ideals and aims, together with the policies they believed would achieve those aims. The electorate would then have the opportunity to choose the party which most conformed to their own beliefs. And I think that the last party leader to do that was Margaret Thatcher. (She wasn’t my choice, but it worked for her!)

Since then there has been a not too subtle change in approach, so that at best, the parties try to dress up (or dilute) their policies in a way which will appeal to as many different sectors of the voting public as possible; or at worst, try to discover what policies would most appeal, and then shoe those policies in to their own manifestos regardless of principle. (The immigration debate is a case in point.)

For some reason the policy makers believe that the general public don’t sense this; and tragically, these days, they are often right, not because voters are not intelligent, but because we have become bored with the institutional cynicism thus displayed.

What happens in other countries?
It is fascinating to compare our situation with that in other Western countries. For example, take infant mortality. The highest level (per thousand live births) is USA, and the lowest is Sweden. Child poverty: highest in USA (by a long way) and lowest in Denmark. Gender inequality: worst in USA, best in Sweden. Environmental sustainability: worst in USA, best in Nordic countries (and Switzerland). Income share of the top 1%: USA over 18%, Denmark 4%. And the point of all this? Where these figures are represented on a graph, UK come up roughly in the middle of the countries represented. But there is one more graph, which, significantly, shows that in all respects, the best performing countries are those where tax is highest as a percentage of GDP.

In the UK it appears that the two main parties are competing to achieve the lowest taxes per capita, and the result is the present misery and inequality. But the labour party have a very strong advantage in their ‘battle for hearts and minds’. It would not be against party dogma to increase taxes, and it would lose almost none of their core votes. Imagine how popular it would be, for example, if all those earning, say, half a million or more were to pay 90% on anything above that threshold. And how many of those will ever vote Labour?

The current tax regime in this country is one which favours the very rich. Thus the very rich have an enhanced influence on the direction of Government, which in turn has an adverse effect on democracy. It can be shown (in addition to the statistics shown above) that the greater the gap between rich and poor, the less notice Government takes of the opinions of the general population. This is evident at the moment, for example, in the ‘fracking’ debate, the GM food debate, the HS2 debate and many other areas. MPs, and MEPs, seem increasingly reluctant to engage with their constituents (although that is only my own experience rather than a statistical fact, and particular to some Conservatives and UKIP!)

Something to recognise is that people earning a very high income are generally uninterested in their pay packet, except as a measure of their success when compared to their colleagues or competitors. The level of tax is irrelevant to them when applied across the board. After all, they certainly have adequate spending money!

History shows that a regime which taxes high earners heavily does not drive a significant number of them to move away. They are generally motivated by love of their job and a competitive spirit, not a desire for another Ferrari! And when a few footballers or pop stars or even the occasional banker do depart, there are plenty more good people waiting in the wings. But the additional tax revenue can fund improved services, and very importantly, many new council houses (not available for sale to tenants). Employment would rise. Families would afford child-care, and mothers could go back to work. Benefit budgets would reduce. A cycle of increased prosperity could begin. SMEs would begin to prosper, and they are much more important to the average man or woman than the huge transnationals, who are only trying to please international shareholders, not British customers.

An enlightened approach, along the lines adopted by the prosperous and high taxed economies in the Nordic countries, could begin a steady climb to the sort of living standards which we all crave.

Our collective minds have been deadened by the oft-repeated mantra from both main parties that low tax is good for business and the economy – but the facts indicate this to be totally false. Back in the last century, when my father, a confirmed Tory voter, was paying ‘supertax’ at a rate of 19s 6d in the pound, the country was arguably in a worse state than we are now, but the welfare state and the NHS had been put into place after the war and the gap between the rich and the poor was at a completely reasonable level. Democracy was working.

Now look across the Atlantic, at the richest economy in the world, where infant mortality is the highest in the developed world, as is obesity, and the rich/poor divide; and tax revenue as a percentage of GDP is amongst the very lowest. This is not a situation we should wish to emulate.

My point is this, Mr Milliband. Go back to first principles. Stop trying to compete with the Conservatives, whose dogma-driven agenda will undoubtedly continue to fail. Austerity didn’t work in the great depression in the USA, and it was not what saved us after the Second World War. It is doing us untold damage now. Please, let us hear something new and challenging, not just more of the same! As things stand, I wouldn’t vote for any of the three mainstream parties (and UKIP are a joke!) and I am begging you to give us all a credible alternative!

Yours sincerely

A disillusioned voter

Tim Thomson

PS Much of the information I have referred to above has been stolen from a brilliant book by the Canadian journalist Linda McQuaig, with Neil Brooks, called ‘The Trouble With Billionaires’.